Climate Change Bill [HL]

We have had an interesting debate, although there is something very British about noble Lords queuing up to say how innumerate they are. We are all pretty numerate, but it is a matter of trying to explain the figures in a forum like our Committee, when we lack the good communications technology that the Committee on Climate Change will certainly have. I freely admit that we shall return to some aspects of this important debate, as some of your Lordships have said. The significance of this matter is such that I have here a speaking note of 11 pages; however, I shall start by sharing its very last sentence with the Committee. One or two Members of the Committee have asked how the Government can prove that we are determined and committed to decarbonising the UK economy. From that point of view, the Bill needs more clarity. We will take that aspect away to see how we can modify the Bill to make it absolutely clear that we are committed to that decarbonisation. That is what underlies it: we are all agreed on trading. The only reason that people might oppose trading on principle might be if we are not committed to doing anything ourselves. The very last sentence of these 11 pages says that in view of the opinions expressed, we are certainly prepared to take the Bill away to see how we can clarify our commitment. I do not propose to use all 11 pages; that was just to frighten your Lordships. However, I want to answer the discussion on the amendments which, as they were put to us, have been incredibly interesting in getting the debate going. It will also be useful for our debates on other amendments. Domestic action is crucial and, if I have not made this clear, I want to emphasise that we recognise the importance of reducing our emissions within the UK. We are committed to the international principle of supplementarity, which states that the use of international mechanisms should be supplemental to domestic action. The latter should, therefore, probably constitute the significant element in our efforts to meet our targets. For example, the 2007 energy White Paper, Meeting the Energy Challenge, sets out an ambitious and far-reaching programme of action across the economy to reduce our own emissions. Our projections are that it would put us on track to reduce carbon dioxide emissions—through domestic action and the EU Emissions Trading Scheme—by between 21 and 26 per cent by 2020. We recognise that further action will be needed. However, as I have said before, a tonne of carbon is a tonne of carbon wherever it is emitted. The international trading has significant benefits in reducing the cost to the world as a whole in tackling climate change, by providing the finance needed for developing countries to move to a low-carbon development path. It also underpins the global system that we simply must have if climate change is to be tackled. The question that we must ask, therefore, is: how are we to get the right balance between domestic and international action to reduce emissions over time? We are talking about a fairly long timescale. The amendments proposed would take different approaches to that balance. When debating and scrutinising a Bill, it can sometimes appear as though amendments to one part of the Bill are somewhat contradictory to those in other parts. That is easily done—I have done it myself when in opposition—and there is nothing wrong in it. We are here to scrutinise, so I make no point on principle that, because an amendment takes one view, a political party is therefore being contradictory or changing its mind. However, I will deploy the amendments in turn. While the amendments take different approaches, we do not accept that they capture the complexity of the situation or the fact that this picture will change considerably before 2050. For instance, within the EU, surely we can expect the European Commission to come forward with proposals to change how the EU Emissions Trading Scheme operates? Meanwhile, internationally, as the Committee will be aware, discussions on the post-2012 framework have been taking place in Bali—and their outcome is difficult to predict. Amendment No. 25 would place a limit on the use of carbon units of 30 per cent "““of the difference between the 1990 baseline and the annual equivalent of the carbon budget””." Carbon budgets will get smaller over time, as we reduce emissions towards our 2050 target, so the difference between the 1990 baseline and the carbon budget will increase over time. This amendment, therefore, would mean that the number of carbon units allowed would increase over time. Under Amendment No. 25, if the 2050 target was set as at least an 80 per cent reduction, as many of your Lordships have proposed, this amendment would mean that the limit on the use of carbon units was higher than the budget itself. That is because the level of the carbon budget would be, at most, 20 per cent of the 1990 baseline in 2050, while the number of carbon units allowed would be 30 per cent of 80 per cent, which is 24 per cent of that baseline. Amendment No. 27 would limit the use of carbon units to 30 per cent of the carbon budget, so, over time, as that budget gets smaller it would mean that the number of carbon units allowed would decrease. As one of your Lordships has already mentioned, that is therefore the opposite approach to that taken by Amendment No. 25. Amendment No. 111 would place no explicit limit on the quantity of carbon units that may be used; instead, it says that if we are going to use carbon units, no more than 5 or 10 per cent of them can be from overseas. In practice, the vast majority of carbon units credited to the net UK carbon account will come from elsewhere in the European Union and from the international carbon market. This amendment would, in practice, make it difficult for us to use any carbon units to meet targets and budgets. That may not have been the intention, but I am trying to explain the practical effect. I now have about seven pages extolling the virtues of emissions trading schemes and their importance. I think everyone understands that they can have an importance, particularly in providing aid to developing countries. I will save these for other debates, showing that I have learnt a thing or two during the past 30 years while going through each House in succession. None of this is to say that this debate is not important. We are all grateful to the noble Baroness, Lady Miller, for letting us have this crucial debate early in the Committee’s proceedings. The Environment Audit Committee in the other place looked at this very issue and concluded that, "““this must not become an ‘either/or’: the Government should ensure that the UK’s targets are sufficiently challenging that they drive decisive emissions reductions at home and abroad””." We are already committed to looking at tightening up our 2050 target, as we said at Second Reading. There is a general consensus on that question. We all recognise the need to meet our international obligations under the principle of supplementarity, and we have every intention of doing so under this Bill. However, as your Lordships have said, the situation is complex and not the easiest to explain. That is why we are proposing and asking the Committee on Climate Change for each budget period on an ongoing basis to provide advice on the appropriate balance between domestic, European and international action. This is a flexible approach that recognises that the international climate change framework will look very different in 2050 from how it looks now—although I was taken by the point made by the noble Lord, Lord Oxburgh, on not leaving it all to the Committee on Climate Change in this respect: there are other aspects of this for business. The noble Lord made a telling point. For those reasons we would like to take this concept away to see where we can clarify in the Bill—although I do not identify where that will be—that we are committed to decarbonising the UK economy. We obviously want to decarbonise the world economy at the same time, but the fact of the matter is that we do not want to do one of those things by hiding behind the other. That is the point that we need to come back on, and we are grateful for the debate initiated by the noble Baroness.